Reducing your expenses and saving money is not the road to wealth. Productive use of the money you have and the production of value is. With that said, reducing your expenses is often the easiest way to increase your cashflow. It doesn’t require investing money or the hard work of creating something of value. It just requires not doing something or doing something differently, which is easy!
Making this work in a way that doesn’t make your life awful is the trick. So make a stipulation that you’re not going to reduce your quality of life while you look at your spending for ways of saving some extra cash. Now, I’m assuming that you already spend in a responsible manner and don’t abuse credit cards or buy stupid things.
Let’s look at one of your big monthly spends such as groceries. Your need for food isn’t going anywhere so you might not see any potential for savings here without lowering your standards. Where I live there is a store with a coupon system that allows customers to receive 4% back on the money spent in store if it’s spent in a given way. The given ways are through participating restaurants, travel companies and amusements like the zoo. A stock with an initial dividend yield of 4% is a pretty good yield. And 4% back on my yearly grocery bill is a lot of freed up cash that I can use to take my family out for meals and go on trips. What’s 4% of your grocery bill in a year? For my family, this saves us about $40 dollars month. Simple, and it adds up.
We’re going to do these things anyway so the 4% is actually a return to me and not just something extra I’m paying for at a discount. Now, you can use this idea to inflate your lifestyle as well as save money. It depends on whether you end up spending just as much money as you were previously. I guess your money is going further at least.
Where else can you look? My parents pay huge monthly cell phone bills because they’re paying for brand new phones as well as their plan. Decouple these things. Buy a blank phone for $150 that is last year’s model and then get a SIM pack from a provider. From what I can tell, I pay $30 less a month per phone than my parents. How many investments pay for themselves in a matter of months?
When it comes to gifting, a little foresight can go a long way. For example, I like audiobooks and I use Audible. I also think it’s a good gift. It’s novel, thoughtful and very easily given to someone remotely if you can’t get to them. Audible have memberships in which you buy book credits which are redeemed against books at a fraction of the cost. A credit buys one book, whether it’s for you or someone else. I can gift an audiobook to someone and pay a fraction of the price of the book. I’m talking about paying 50%, 75% less per gifted audiobook, depending on the plan and the book. How many gifts can you run through this or a similar method in a given year? How much would you save?
Also, when you’re about to buy something online, double check if there’s a coupon code floating around on a coupon site that you can use. I’ve saved on some large purchases before by doing this. These are nice to get but one-time discounts don’t change your life. What we’re talking about is setting up permanent discounts on the cost of running your life. Easy to do, and very effective at improving your sense of wellbeing.
